The Altrad Group Full-Year Results for the 12 Month Period Ended August 2017

After the acquisitions of Hertel in 2015 and Prezioso in 2016, followed in September 2017 by the successful public offer for the Cape group, Altrad has entered a new phase of evolution.

Today, it has become one of the world leaders in the provision of services to industry.

This strategic development is the third stage in a history that began in 1985 with the founding of the group by Mohed Altrad.

Initially specialised in the manufacture of construction equipment, Altrad’s second stage of development took place in the hire sector, accompanied by a change of scale.

Pursuing a policy of dynamic growth and diversification of activities, at the end of the third major strategic move in its history, Altrad has become a group primarily oriented towards services to industry, and has retained the strength of manufacturing and availability of hire facilities of its previous lines of business.

Thus, the group now offers its customers:

- A full range of services to industry, in the framework of facility maintenance and new construction, including access, insulation, corrosion protection, the engineering and installation of mechanical systems, as well as specialised services (inspection, environment). This offer, mainly aimed at major industrial customers in the Oil & Gas, Energy, Process Industries (including Chemicals and Petrochemicals) and Construction sectors, is deployed throughout Europe as well as in Africa, Asia, Australia and the Middle East.

- The service activity, which largely predominates, now accounts for 82% of the group's revenues.

Recent commercial successes have confirmed the group's strategic choices and the relevance of its service offering, including winning major contracts for the renovation of Austerlitz railway station in Paris, maintenance of the Ineos sites in Grangemouth (UK), the construction of an acetylene manufacturing unit for BASF (Germany)....

With a turnover of more than 3.4 billion euros and 39,000 employees worldwide, the Group has achieved world leadership in its fields of activity. It has a resilient business profile, due to the predominance of high recurring maintenance activities and its presence in various geographical areas (United Kingdom, Continental Europe, Asia, Australia, Africa and the Middle East) and in several business sectors (Oil & Gas, Energy, Construction, Process Industries), reducing its exposure to market risks and cyclical fluctuations.

Developments by business line naturally reflect the significant growth in services, but also the resilience of the manufacturing, hire and sales activities for construction equipment and public authorities.

EBITDA performance has improved, representing 15.1% of sales compared to 13.5% at the end of August 2016. It reflects the efforts made in terms of operational efficiency and the streamlining of central structures ("LEAN" model).

Results - current and net operating income - also show strong growth. They reflect the constant requirement for profitability, the implementation of intra-group synergies and economies of scale.

Free cash flow generated by the business has increased significantly, reaching an EBITDA conversion rate of 59%. It is the result of work carried out to optimise working capital requirements and efforts to make better use of capital, in particular by pooling equipment between the various entities of the group.

Changes in shareholders' equity and financial structure reflect the development strategy implemented and the constant concern to maintain net debt at a reasonable level, leaving room for sustainable and balanced growth.

Safety remains the number one concern of every Altrad employee up to the Chairman. Our ambition is to go beyond quantified objectives (zero accidents) and create a genuine safety culture. During the past financial year, we launched our new Safety brand "Beyond Zero" and inaugurated our safety excellence centre, in charge of leading our safety teams, identifying and sharing best practices, implementing reporting mechanisms, creating training materials, conducting on-site audits...

Ethics is one of the essential conditions in conducting our business. The Altrad Group has implemented a Code of Conduct, applicable to all its employees, which complies with the strictest laws of the countries in which it operates (Sapin II law, UK Bribery Act, FCPA, etc.). The group’s legal director acts as Compliance Officer in conjunction with the Group Ethics Committee.

Risk management is an essential part of the group's life. As a family-owned company committed to sustainable growth, the Group pays particular attention to controlling its main risks, whether macro-economic, political, cyclical, financial or operational.

A risk map is updated every year and presented to the Board of Directors, along with actions to reduce exposure.

PROSPECTS

The Group's presence in different markets and its broad geographical coverage should enable it to take full advantage of the opportunities that will arise.

Thus, large-scale industrial installations are under construction or planned on every continent, whether in Oil & Gas (LNG terminals, offshore platforms), energy (nuclear power stations), the chemical industry, etc. Major refurbishment programmes are also being launched by operators to extend the life of existing sites.

A recovery in construction-related activity is being seen in Continental Europe, compensating for the foreseeable slowdown in the United Kingdom in this sector, given the potential impact of Brexit.

Emerging countries (Asia, Africa…) are experiencing sustained growth.

With its strong leadership positions, the group is ideally placed to take advantage of these development opportunities and assert itself as a key player in its markets. Its sound financial structure, stable shareholding, efficient management and the rich diversity of cultures represented in its midst are all assets for its future success.

Notes to editors

The Altrad Group is a global leader in providing innovative, safe and reliable services and goods to customers across the industrial, energy and construction sectors. With a presence in more than 100 countries, across 5 continents, Altrad employs more than 39,000 employees and has pro forma revenues of c. €3.4 billion.